Country Club homeowners paying tax on land they might not own

The Monroe County Assessment Office is assessing land values to the buyers of 21 units at Aspen Commons for taxes, even if it isn't clear that they own it.

David Pierce

The Monroe County Assessment Office is assessing land values to the buyers of 21 units at Aspen Commons for taxes, even if it isn't clear that they own it.

The Assessment Office assesses property value for tax purposes. It notes that the developer's township-approved plan, also called a plot map, only shows one large lot for Aspen Commons. The plot shows a single property tax number and corresponding county tax-map location for all 21 homes.

So the Assessment Office took it upon itself to create separate land boundaries and tax numbers for each building owner. The Assessment Office has decreed that each owns 0.02-acre, an arbitrary size encompassing the ground under the building, and that the ground has a taxable market value of $40,000. Yet 0.02 acres is only 872 square feet, much less than the actual size of the "footprints" underneath each Aspen Commons building.

The Assessment Office says it has no legal choice but to tax land to each buyer, whether or not any land was conveyed to those buyers at Aspen Commons, a part of Country Club at the Poconos.

"The state requires that there be a land and a parcel value," Chief Assessor Tom Hill said. "The plot plan never addressed how much acreage."

Hill said this isn't the first time a developer has submitted an incomplete subdivision plan approved by a municipality. He says it isn't viable for his office to insist that the developer and municipality correct the problem — declare how much land is being sold and where it is — before taxes are assessed.

"The way Pennsylvania is set up, the county doesn't have any teeth to bite," Hill said, adding that ultimate authority and ultimate responsibility rest with municipalities. "We have to do what we have to do."

Mark Love, solicitor for the county assessment office, says the office does sometimes notify a township of such a problem as a courtesy.

"There's no obligation on the part of the county to do anything," Love said. "It's a township matter."

Middle Smithfield Township Supervisor Debbie Kulick says the reason the township approved the plan without any home dimensions is because the developer never intended to convey land to the home buyers — not even the ground on which the building stands.

"They don't own the footprint," said Kulick after reviewing the 1997 approval process with township Zoning Officer Deb Ogden. "They're purchasing a single-family building only."

Regardless, the county assessment office says, a land value, by law, has to be apportioned to each building. Land values were established by the assessment office for the 21 Aspen Commons units as soon as the project was approved in 1997, before any buildings were built or sold by the developer.

The "footprint" lots — the land underneath the homes — are valued for tax purposes at $40,000 each, giving each a taxable assessment 25 percent of value of $10,000.

In fact, nearly all of the hundreds of building lots at Country Club of the Poconos — the wider private community that includes Aspen Commons — are valued at $40,000. The $40,000 land value is applied to lots at Country Club of one-third to one-half of an acre — just as the same land value is applied to Aspen Commons buildings that the county agency arbitrarily declared are only 0.02 of an acre.

Any parcel of less than an acre is classified as a "sublot," Hill said. And each sublot within the same development is typically assigned the same value for tax purposes.

Community amenities — such as tennis courts, a swimming pool and common undeveloped open space — are free from taxation if those amenities are used exclusively by home buyers in the private community and aren't open to the general public. But buyers are indirectly taxed for those amenities through their individual land taxes.

It is unclear if the taxable amenities included the 18-hole golf course that was initially marketed as a community amenity. The current managing partner of Country Club of the Poconos, Big Ridge Developers L.P., operates the golf course as a separate business, open to the general public, and Country Club residents are expected to pay an additional fee to join.

So if the golf course was originally considered an amenity in determining residents' individual land assessments for taxes, then those residents are being taxed for something that's not part of the development.

Big Ridge Developers L.P. challenged the land assessments on 72 undeveloped sublots soon after buying Country Club of the Poconos in October 2000. Big Ridge's claim that the values were set too high wasn't upheld, but the challenge produced some interesting information on the odd way tax assessments on land can play out.

An acre of land within the same development — when all the building units are added together — can be worth different amounts depending on what kind of development takes place.

Big Ridge official Bob Pritz testified that one-third acre single-family lots at Country Club of the Poconos would generate $120,000 in taxable value per acre under county assessment practices. So-called zero-line lots — deeded property footprints upon which single-family structures were to be built — would yield about 4.5 units per acre and produce $180,000 worth of taxable land value, Pritz added.

The Big Ridge Developers' assessment challenge, though, ignored yet another oddity of the so-called footprint lots. If each "footprint lot" at Country Club's Aspen Commons was actually just 0.02 of an acre, as the assessment office declares on its tax records, then 50 such lots, theoretically, could be squeezed onto a single acre though township zoning regulations would prevent such a high density of construction. And at $40,000 per sublot, this would yield 50 units and produce $2 million in total land value for a single acre — astronomically more than a typical acre of taxable land in any part of Monroe County outside of a so-called private gated community.

Townhouses of four, six or eight residences each average about six units per acre, said the suit, producing an assessed land value of $240,000 per acre. The only declared condominium complex at Country Club, Turnberry Village, produced seven units per acre — $280,000 per acre, Pritz said. And the same lot could be counted vertically, not just horizontally. The Turnberry Village units included "stacked lots" where upper-story condominiums had floors also another condo owner's ceiling that were declared "land" for tax purposes.

This meant the same ground, or at least the ground and the air above it, could be assessed three times for a planned three-story condominium — even before anything was built.

"It is respectfully submitted that the above land assessments for lots where nothing has been constructed are not rationally assessed," Big Ridge attorney William H. Robinson Jr. wrote in the assessment challenge. "The fair market values per acre at Big Ridge range from $120,000 to $280,000. ... It is respectfully submitted that using the county's figures of $120,000 for 3 single-family lots in an acre, that it should not be permitted to increase the value of unimproved acreage as high as $280,000 per acre."

Big Ridge sought to reduce the assessed value for most of the condominium units to $14,000, drop the declared townhouse assessment values to $20,000 each, and lower the value for "zero lot line lots" at Hawthorne Village to $30,000.

The developer withdrew the appeal of the Aspen Commons lots before having to state in a court filing what type of housing applies there.

Monroe County Judge Peter J. O'Brien never addressed the central issue of whether the assessments are reasonable or proper. Instead, he ruled that Big Ridge failed to present testimony from an "expert" to rebut the assessment office's standard practices. Pritz, an employee of the company seeking the lowered assessment, doesn't qualify as such a tax expert, O'Brien concluded, so Pritz has no legal standing to force the county to explain and defend its taxation methods.

Hill's office can and does continue to conduct land tax assessments the same way.

Big Ridge never appealed O'Brien's ruling. Instead, the developer quickly sold construction rights to scores of remaining undeveloped parcels to other building contractors. The Big Ridge practice of finding intermediaries to buy blocks of land parcels, generally leaving it to building contractors and other developers to sell lots directly to individual buyers, is still employed today.

Big Ridge Developers also formed a non-profit organization called a property owners association, then in June 2004 transferred ownership of several "open space and community facilities" parcels to the association — which acts as an agent of sorts for all home buyers in common. Big Ridge also won agreement from county assessment that, in keeping with previous court rulings and county policy, those parcels would no longer be assessed for taxation once turned over to the property association.

The "open space parcels" are defined as undeveloped land set aside for common use. This includes the land surrounding buildings in so called "village" areas, some where multi-family buildings defined as townhouses are interspersed. The surrounding land is no longer taxed, but owners of dwellings in those buildings continue to be assessed individually for land taxes on the "footprint" underneath the structures.

Yet it appears developers of Country Club of the Poconos never filed deeds or map plans that gave any metes and bounds dimensions, defining and separating the buildings deeded to individuals from the overall larger parcel. If, in fact, that land was never separated, then it would mean the developer continues to hold title — legal ownership — to land under those buildings, land that individual buyers continue to pay taxes on, even as the overall parcel is called tax-free open space.

It will likely take a court of law and complex negotiations to sort out the web of inter-related tax and title issues.